Tuesday, April 11, 2017

The United Airlines
incident is a most instructive situation, and one that has drawn a number of
issues to the public's attention. I worked in the airline business for many
years, and am quite aware that any transaction between an individual and an
airline is the single most one-sided agreement that is ever voluntarily
entered.

First, we should ask
ourselves why that is. Airlines are commercial behemoths that grew from
state-owned or state-controlled entities into private businesses; they brought
with them a common view of their own unquestionable authority and have been
allowed to develop this deportment unchecked.

Consumer protection in
North America is weak to non-existent. Partially as a result in the separation
of responsibilities between federal governments and state/provincial bodies in
an industry that was not foreseen by our respective founding fathers. Simply,
there is no consumer protection in this industry at all.

Overbooking is a scourge
for carriers that do operate on extremely thin margins. It is, however, a
problem that has diminished considerably since the 1990s, and the introduction
of e-tickets, which at their core are the marrying of a reservation with money,
have reduced the majority of travellers’ attempts to hold several simultaneous bookings.

All airlines have
specific flights that were subject to wild overbooking; Northwest Airline’s
Friday evening Minneapolis/Winnipeg flight offered 120 seats; regularly they
would book over 200 passengers and still leave with one or two empty ones. A
function of business travellers booking four or five seats to come home for the
weekend, and then picking the right one when their schedules clarified.
E-Tickets have reduced this sort of behaviour considerably.

However, airlines do overbook,
and it is in the resolution of the problem that we are finding ourselves today.
United appeared to try a little bit, and then quickly resorted to the
contemporary tactic of dealing with commercial issues, and brought in the heavies.
This was completely wrong. While the passenger’s blood curdling scream may have
been a touch theatrical, but I have no idea what was going through his mind at
the time, this was not a satisfactory way to resolve what was a simple
commercial issue.

United overbooked simply
to maximise their revenues; fair enough. When presented with an over booking situation,
they should have continued the “bidding” process, offering increasing
inducements to passengers until one or two were persuaded to accept. The story
indicates that they tired of this process at $800 and called “The Boys”, but
has they risen to the heady heights of $1,200 - 1,500 they would have found
somebody willing to change.

It was, after all, their
gamble that failed to pay, and adding a few dollars to encourage a change of
plan would have worked; I have seen this before.

It is the quickness with
which airline employees will hide behind the excuses of “security”, “our terms of
passage” and “operational requirement”. “We have the right to ….”, they intone,
and indeed they do. But having the right to disembark and client and bringing
in a horde of unthinking thugs to haul them off an aircraft are poles apart.

It is also interesting
and no less concerning that Air Canada in the past month have defended
passengers finding themselves on “Stand-by” when a confirmed seat has been
purchased by glibly intoning “a reservation isn’t a guaranteed seat”. Oh no? When
did this change, and how many clients know that buying the most economical confirmed
seat that an airline sells is only a “stand by” seat? Now defending overbooking may be hard yet justifiable, but turning the problem back to the passenger, and indicating that simply because they had paid the lowest fare (a price offered in exchange for a service), they deserved to be bumped is simply outrageous.

And this is worrying.

If
this answer, of robust and haought dismissal of any complaint, becomes acceptable, then logically airlines will and can sell
increasing numbers of seats by simply waving the (massive) rule book at clients
duped into thinking that a cheap seat was a great way to get home and see the
family for a weekend. “Sorry folks, but the regulations allow this, and I have
you rerouted via Plonksville and Tarabang. You will get home in a week.”

This is a serious
matter.

Airlines need to
overbook to protect their margins and maintain profitability in a very
difficult industry. However, when they lose the gamble and are faced with
denying passage to their clients, they should stand up to the plate, pay
whatever it takes and face the consequences of their actions. Resorting to the use
of law enforcement officers to enforce the results of a commercial decision is
a very disturbing pattern, and one that government agencies charged with
protecting the interests of their constituents (and not simply their
financiers) need to address.

Sunday, June 21, 2015

I remember being in Dubai in the mid-eighties, and being
introduced to the new airline, Emirates, that was just being launched. I was
there to seek some business with DNATA, the national travel company, and all
the talk was of the development of this upstart.

It was difficult to believe, on the one hand, because we
were sitting in a dusty, hot and very isolated emirate, and the Dubai of 2015
was still thirty years and several trillion dollars away, but enthusiasm was
not in short supply.

“The key”, I was told, “is our location; in the middle of
everything”. My conversationalists this day were Tim Clark and MauriceFlanagan, two of the most significant men in the global aviation industry;
they were fun, interesting and most engaging, and probably still are; I thought
of staying, and throwing my hand in with this idea, but as with most of us and the
opportunities that come our way, I packed up and went home instead.

They were, of course, quite correct, and now we see the
global travel industry in the throes of a major shift. Who will win, what victory
will look like and when it may be proclaimed are all fuzzy, but we can say for
certain that the industry in ten years will be a very, very different beast.

Airline geography is a function of population diffusion
and migration, of the ability of aircraft to fly immense distances and of political
and financial sway.

There is no doubt that modern aircraft with the ability
to fly for sixteen to eighteen hours have made the most difference; they have
placed the Gulf States in the global centre of the aviation world. Most centres
on the planet can be connected with a single transfer; Europe to Australia, South
America to Asia, Africa to anywhere.

And herein lies the rub; the major Middle East carriers,
Qatar Airways, Emirates and Etihad have had the money to invest, and invest,
they have. They offer brand new aircraft, superb in-flight service and regular
and punctual service. They serve the world’s diasporas with ever-larger
aircraft moving hundreds of thousands of families home to SE Asia, the sub-Continent
and Africa, while offering the high-yield business travellers a level of
service that is rarely equalled by their Western counterparts.

The US carriers, in particular, no strangers themselves
to the benefits of duopolies and cartel-like behaviour, cry “foul”. Their route
strategies, so dependent on trans-Atlantic flights connecting to “partners” for
onward travel are being usurped by airlines overflying Europe for the final
local disbursement to be made from their Gulf hubs; considerably more efficient
for their passengers, but a commercial stake-in-the-heart for those promoting
the transfer hubs of Europe.

So we see a storm brewing; Canada refuses additional
traffic opportunities for Emirates so the government of the UAE closes a
Canadian military camp in Dubai; The US Three (United, Delta and American) cry
foul at the perceived advantages that the Middle East Three may have with subsidised
fuel; the Middle Eastern trio respond with stories of the American governments’
own anti-competitive instincts (just ask Norwegian about their welcome to
America). And so it goes on … but to what end?

American carriers have old aircraft (by and large),
indifferent crews and poor ground services; they suffer from immense legacy
costs from both union contracts, pension obligations and bloated management
that are not a part of the Middle Eastern carriers’ obligations. This may or
may not be fair, but most certainly adds significantly to the cost of their
tickets. They are losing passengers, but instead of whining, perhaps they should
seek to control costs rather than chip away and monetising every perceived
benefit their passengers might enjoy. Perhaps they should offer better service,
and perhaps they should simply stop being so damned adversarial to their
customers.

And perhaps all six of these behemoth airlines should be
watching Istanbul.

Under, perhaps, the cover of darkness, or perhaps because
nobody ever took Turkey as seriously as they should, in a wide variety of arenas,
both economic and political, Turkish Airlines has grown into one of the world’s
most powerful airlines.

They already fly to more countries than any other carrier
(105), and with their hub in Istanbul within range of so many second and third-tier
cities of their smaller A319 fleet, their growth is only just beginning.
Transiting in Istanbul is an extraordinary experience; so many aircraft, so
many destinations and so many people; their expansion plans are ambitious and
their government an integral part of this future.

When is governmental investment in infrastructure a “vital
key to economic growth” and when is it a “subsidy”?

Friday, October 31, 2014

I am a relatively lucky traveller; I usually fly in the
pointy end of aircraft, enjoy a great deal of international wandering, and am
generally one who floats through airports unscathed.

My baggage, however, is a completely different matter and
the complete utter indifference of airline personnel when Bad Things Happen is
eye-watering; add to that, the insouciance of the security staff, and a day at
the airport can translate into blood-pressure medicine (or alcohol) in short
order.

As you might guess, I am at an airport; Toronto, since
you ask. At around 10.00pm last evening, Trip Case (God love ‘me) advised me
that my 1445 flight to Chicago had been cancelled; the advice coming not from
the perpetrator, you might note, but from a third-party.

I called United - never easy, as their
voice-recognition-technology seems not to understand British accents saying
tricky words like “Yes” or “Rebook my flight”, and managed to get the ticket
reissued for a 7.30am departure to Chicago via Toronto. Irritating, but I am on
my way.

So, perky as one might image, I arrived at the airport,
lied about the weight of my carry-on luggage - well, if I gave it to them, I
would likely never see it again - and headed to security. Today, they seemed to
take delight in closing one of two lanes just as four of us approached, and
thus added a good ten minutes to our line-up as they laughed in the manner of a
Halloween Demon at our discomfort; shoes didn't need to be removed, but I did
anyhow, and waited as a young screener stared at the image of my luggage for
what seemed to be hours, but was in fact only about three minutes; she seemed
fascinated, everything a potential threat, each item seemingly new to her
experience.

Finally she let it through; I was reprimanded for
something or other regarding a pile up of plastic trays that I am sure was not my fault, and dispatched on my way.

More security in Toronto; this time, two young screeners
clearly infatuated with each other, and giggling sweetly ignored the pile up of
bags until it was pointed out that they could delay their courtship until the
coffee break; snarling, they went back to work, and we came to the planes.

I would not have thought that asking to be put on a
stand-by list for an earlier flight was a trigger for venom; however, the
United check-in agents were so completely dismissive of my request that I
immediately left, my tail between my legs to ruminate on why travellers and
those working to assist in our passage have become so adversarial.

Wednesday, September 17, 2014

We have all been on flights where things go wrong; in fact,
given the complexity of aircraft and their scheduling issues and the millions
of passengers that travel each day, it is a wonder that things go wrong on a
more regular basis.

But last night they did, and boy did the Air Traveller Gods
send their thunderbolts down upon us.

I was flying on a United Airlines run from Chicago to Brussels with an onward connection to Toulouse; I was flying in First Class on
an Aeroplan reward ticket. I had one meeting in Toulouse, and was then booked
to fly to London on the 18th at 0850 on a separate British Airways
ticket.

Two hours after departing Chicago, a child was taken ill on
the plane, and we diverted to Bangor, Maine to get the poor little tyke to
hospital; this was unscheduled, but happens from time to time. We then departed
from Bangor to fly the remaining six hours to the Belgian capital, and all was
well. I fell asleep and dreamed of constructing tourist accommodation units in
Georgia, a project that seemed to take on the most peculiar for as
dream-projects are apt to do.

However, waking up some hours later I saw that the flight map had become
corrupted or we were heading back to Chicago, which we were. A fault with the
rudder, sufficiently serious to prevent a trans-oceanic flight, but not serious
enough to prevent us turning around, was blamed, and that was that until we
landed at O’Hare airport exactly twelve hours after we had departed.

And this is where it all started to tumble.

United Customer Service was absolutely and utterly dreadful;
they sent a team of unqualified people to handle the rerouting requirements of 280
feisty and not unanimously jolly passengers. I was fortunate and reached the
front of the line immediately and was presented with new boarding passes and
curiously, a hotel voucher for a cheap hotel that lies $50 by taxi away from
the airport.

I told the service agent that because of the delay, I no
longer needed to travel to Toulouse, and could they simply put me on one of
their three non-stops to London that day.

They could not because:

I had a ticket to Toulouse and not London

It was “free”

It was Air Canada and they couldn't touch it

The agent hadn't done any ticketing for over a
year

She was actually a gate agent in charge of an
0630 departure, and would be “written up” if her dawdling in the customer
service centre caused her to delay that flight.

I reminded them that:

Although I had a ticket to Toulouse, they had
failed to deliver me there and some give and take would be appropriate.

It would cost them less to only send me to
London

The ticket was not “free”; it was paid for in a
currency to which they subscribe, and earned by doing a substantial amount of
business with their “partners”

Air Canada and they were all part of a happy
family called Star Alliance and she could, by a magical process called “fimming”
reissue these coupons

Not much had changed in the world of ticketing
in the past year, and if she had to get a flight out at 0630, why was she behind
this counter at all?

She then left, giving the file to a delightful but terribly
soft spoken agent, and as the volume audibly increased as the remaining
passengers were beginning to get a bit peaky.

She now pointed out that:

There was no First Class space, and

Even if there was, I could not get it because
award tickets had to be booked in a particular “bucket” of seats of which there
were none.

Would $7 worth of meal vouchers suffice, and she
could get a closer hotel.

And finally, how did I know what a FIM was?

I retorted that:

I could see on my handy United Airlines App that
there was a seat in First Class at 1825 if she looked closely and that

I fully realised that award tickets were booked
in a particular “bucket”, but so was everybody else’s, and these were not
available either. So I would be most agreeable if she would simply rebook me in
First and I would be on my way.

$7 would hardly quench my thirst, but if that
was it, I would be prepared to overlook this slight.

It would be impossible to reroute my bags which
were already tagged to London

I pointed out that

A month or so previously my bags had been tagged
to London, but that they went to Hong Kong instead, so I really didn't have
much faith in their systems anyhow; and in any case, I would go downstairs once that issued my
new boarding pass and talk to the baggage folks myself.

I was still holding the seat to London that I
had slyly booked as a precaution.

She now reissued my ticket, in First Class to London as
requested, I went downstairs and arranged with a delightful baggage agent for
mine to be “intercepted” and “redirected” to London. I am not holding my breath, but will report its whereabouts tomorrow.

However, I spent over half an hour at the counter, and
getting what I had first requested after thirty wasted minutes of some corporate
defence strategy. I have no idea how the remaining passengers got on, but I was
told that the line-up was still in place five hours later.

Why oh why, United Airlines, do you send out such
incompetent folks; they are all delightful, but only one that I could see, a
gentleman reissuing tickets and dispatching passengers with a smile and click
of his keyboard onto other carriers with no issue.

We are entitled to decent treatment from competent staff; we
are not, after spending twelve hours encapsulated in a faulty Boeing 777 ready
to be nickel and dimed to death on straight forward reroutes. Reissuing agents
need to know the tools that that they have, and your corporate structure should
not rely on the savings made by incorrectly applying guidelines (not rules) to
already deeply inconvenienced passengers.

What possible savings do you make sending passengers to a $66 room in Glenvale (wherever that is) by spending $100 on taxis?

Mechanical issues are inevitable; how you rise to the occasion
is an entirely different matter, and on the morning of September 17th,
you failed dismally.

Thursday, March 28, 2013

I have been reminded by several correspondents, to whom I
am grateful, that the Three Big Airlines are not the only ones flying the
skies.

Indeed there are others, and a conversation recently with
a Chicago-based United employee emphasised that point. She said that during a
recent phone call, Jeff Smisek, United’s CEO, had made the point that as they
watch over their shoulders at competition, Southwest was the carrier that most
concerned him. Their growth was strong, their business model sharp and they were starting to make inroads to their lucrative commercial accounts. Presumably the same holds true for the other giants.

·It is important to note that these figures do
not include Sky West; this carrier specialises in contract flying for the major
carriers, and operates a fleet of 740 aircraft carrying 58,800,000 passengers,
primarily (although not exclusively) for United Airlines.

Now a quick glance at these figures will show a very
interesting story. The three leaders, representatives of the three major global
alliances are significantly bigger then Southwest plus the next six largest carriers.
In these days of the dominance of market leaders, this position is important
because it is the dominance of hubs, by the number of slots available that
determines a carrier’s ability to compete.

Carriers’ growth is also determined by their ability to
interline, that is to carry passengers on a through-journey between two or more
unrelated airlines; while carriers such as JetBlue and in Canada WestJet have
been looking at these partnerships as a vital way to increase revenues, others
such as Southwest so far are resolutely sticking to a business model that has
worked very well up to date.

Carriers with particular market niches, such as Alaska
and Hawaiian, also have significant advantages, however their geographic
benefits may be jeopardised by their isolation, and the inability of their home
markets to grow as fast as they may wish.

Fuel is the primary cost concern for carriers, and to
that end, in June 2012, Delta Airlines paid $180 million to purchase an oil
refining complex from Phillips 66; this shrewd acquisition will certainly allow
them more balance and strategic planning than either the current futures or
spot markets will do.

Southwest is coming to the end of a very successful
long-term fuel contract, and it will be interesting to see how they fare into
the future, and for the smaller carriers, the current and future cost of AvGas
will determine their futures.

We will see how this all spins out; clearly there is room
for smaller niche carriers, and I for one am delighted to see them remain in
the market. They have opportunities to contribute to the overall growth of the
airline industry, and with it the growth in many related businesses and the
health of the economy in its widest form.

As we all know, statistics are chosen by the writer, and this
piece is not meant to be a detailed analysis of the contemporary airline
industry; there are many, many other considerations, and profitablility is
probably the most important.

Profits in this business have been elusive for decades,
and perhaps this consolidation will allow investors to gain a return and
passengers to feel confident that their airline, of whatever size, will
actually be there to carry them on their next journey.

For those interested, there are many interesting sites
that detail every aspect of airline activity; even to the point of revenue per
flight attendant, a curiously important measurement. However, the overall numbers don’t lie; three airlines
dominate with a fourth nipping at their heels. The rest are falling behind.